Act No. 45 of April 18, 1935, known as the Puerto Rico Compensation System for Work-Related Accidents Act (Act 45), establishes that every employer must secure compulsory insurance to cover their employees’ work-related accidents or illnesses. This insurance, which must be renewed annually and is entirely employer-funded, is administered and can be provided only by the State Insurance Fund Corporation (SIF).  SIF’s policy year runs from July 1 to June 30 of every year. Therefore, employers must file the payroll statement on or before July 20, 2020 to secure workers’ compensation coverage for the upcoming policy year. Premiums must be paid on or before the deadlines established by the SIF to cover each semester of the fiscal year. For those employers whose workforce is completely or partially teleworking, this factor is particularly relevant as under certain circumstances this specific risk must be considered when filing the payroll statement and paying any additional cost before the deadline.

Act 45 grants immunity to insured employers from any damages resulting from an employee’s work-related accident and provides leave and reinstatement rights after a work-related disability. Nevertheless, such immunity is conditioned on the employer properly insuring its employees. If a work-related accident occurs and the employer is uninsured, there is no immunity and the SIF will seek reimbursement from the uninsured employer for any compensation plus medical expenses the SIF incurred. The employee may also file an action against their uninsured employer to recover damages.

To obtain proper insurance coverage, an employer must consider all risks associated with its operations on its payroll statement and must pay the corresponding premiums in a timely manner. Failure to do so may result in a lapse in coverage and, consequently, non-insured status. The amounts that each employer must pay vary according to the type of labor the employee performs and the number of employees the employer has. Importantly, employers must also ensure that all their contractors renew their own workers’ compensation insurance policy with the SIF, since an insured employer may be jointly liable for work-related injuries suffered by the workers of an uninsured contractor.

When renewing workers’ compensation policies, bear in mind that, under particular circumstances, employees teleworking must also be considered as a different risk in the payroll statement to be covered by the policy. On May 29, 2020, the SIF issued a Resolution, which has not been published yet, extending until June 30, 2020 (i.e., the end of the current policy year) all workers’ compensation policies for those employees that were required to telework due to the pandemic, without requiring employers to modify their policies. If the employer continues to have employees teleworking during the upcoming policy year, it must consider including coverage for such risk, through the completion of a Form provided by the SIF for such purposes, which must be submitted along with the payroll statement. Since the policy year is about to expire, employers need to keep in mind all these requirements to ensure compliance. 

It is important to note, however, that in connection to teleworking employees, some exception may apply and, thus, employers should not automatically assume that having employees fully or partially teleworking will require them to necessarily adjust their policies to include the risk involved on remote work. Specifically, there is Supreme Court of Puerto Rico precedent that must be considered as part of the assessment together with the current COVID-19 crisis and resulting employer limitations. Furthermore, the SIF is currently considering modifying some of the risk classifications to include remote work as part of the description, which would make it unnecessary to add remote work as an additional risk classification. However, this approach is yet to be confirmed since the Risk Classification Manual is expected to be published on July 1, 2020 (i.e., the first day of the upcoming policy year). Therefore, employers should consider seeking legal counsel before deciding whether to include or exclude the remote work classification to avoid risks and future hurdles.